Updated 6:35 p.m. ET

(Bloomberg) -- State Farm MutualAutomobile Insurance Co., the largest U.S. home and autoinsurer, plans to shut 11 U.S. facilities, displacing about 4,200workers, after a $7 billion annual underwriting loss last year onauto policies.

The insurer will exit Parsippany, New Jersey,and Petaluma, California, in 2018 and the otherlocations by 2021, the Bloomington, Illinois-based company saidThursday in a statement on its website. The work will move to theheadquarters and offices in cities including Atlanta, Dallas andPhoenix. The company said employees in affected facilities willhave opportunities at other State Farm locations.

Higher claims expenses from car crashes

State Farm, Allstate Corp., Hartford Financial Services Group Inc.and Warren Buffett’s Berkshire Hathaway Inc. are among companiesthat have been burned in recent years by higher claims expenses from car crashes as more drivers aredistracted by electronic devices. Higher repair costs have also hurt in an erawhen drivers are logging more miles behind the wheel. Companieshave been charging more for coverage and looking for ways to reducecosts.

“The company’s decision to exit these facilities was based onefforts to best serve customers by gaining efficiency throughstreamlining and improving processes, leveraging technology, andconcentrating employees in larger locations,” State Farm said inthe statement.

Income dropped to $400M last year

Chief Executive Officer Michael Tipsord isworking to improve results at the insurer after being named in 2015to replace Ed Rust, who led the policyholder-owned company forthree decades.

Net income dropped to $400 million last year from $6.2 billionin 2015, hurt by the auto insurance results.

The company posted better returns on businesses includingresidential coverage, banking and mutual funds. State Farm hasalmost 70,000 employees.

The locations targeted for closure in 2019are:

-- Kalamazoo, Michigan;

-- Irvine, California;

-- Tulsa, Oklahoma.

Six other facilities will be shut in the next twoyears:

-- Medley, Florida;

-- Indianapolis, Indiana;

-- Downers Grove, Illinois;

-- West Lafayette, Indiana;

-- Bakersfield, California; and

-- Frederick, Maryland.

Justin Tomczak, a spokesman for State Farm, said the company isexiting leased facilities.

There are more than 500 employees in the Kalamazoo, Tulsa,Bakersfield and Frederick facilities, he said. The first twooffices to shut, Parsippany and Petaluma, have fewer than 60.

Property sale

State Farm in 2013 struck a deal to sell many of its offices toLone Star Funds and then lease back the property. The insurer saidat the time that the transactions would provide cash and give thecompany more flexibility.

“We have already seen many benefits to housing large groups ofemployees together in the hubs,” Tomczak said by email.

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